With the increase in private consumption in the domestic economy, industrial and warehousing demand across the top 5 cities experienced the highest leasing compared to the eight prior quarters. 7.2 million square feet were leased in the first half of 2023, contributing to the segment’s 11% YoY growth.
3PL operators, who made up 41% of all leasing during the quarter and continued to expand across big markets, drove the demand. Following this, the FMCG and retail sectors saw a three-fold increase year over year as they increased their presence in bigger markets like Delhi-NCR and Mumbai, it was noted.
Mumbai came in second at 25%, with Delhi-NCR accounting for 29% of the overall leasing demand for the first quarter. According to the research, 3PL operators continued their expansion drive in Mumbai despite the city’s deteriorating economic and business climate, driving a 37% YoY increase in leasing.
Mumbai came in second at 25%, with Delhi-NCR accounting for 29% of the overall leasing demand for the first quarter.
“To ensure that online orders are delivered quickly, 3PL companies are focusing their expansion efforts on more substantial, congested areas with high-quality infrastructure. It contributed to more than two-thirds of Mumbai’s overall leasing, with a few huge agreements taking the lead. The average deal size for 3PL operators in the city exceeded 2 lakh square feet, which is 69% greater than the average for all of India. Larger markets will continue to be a focus for 3PL operators as they seek to expand their distribution network. Vimal Nadar, Senior Director and Head of Research at Colliers India, is quoted.
Large acquisitions (100,000 square feet or more) accounted for about 80% of the demand in Q1 2023. 3PL firms had the largest percentage of the most significant deals, followed by FMCG & engineering firms. Mumbai accounted for the biggest percentage of large-sized deals, followed by Pune, while Delhi NCR experienced the greatest overall growth in leasing. Also, large-sized deals accounted for over 80% of transactions in the FMCG and electronics industries.
While the demand for industrial and warehousing space remained strong in Q1 2023, there was little new supply in the top 5 cities. At 5.8 million square feet, supply across the top 5 cities decreased 8% YoY as developers kept an eye on the changing demand environment. New project completions across key markets were also hampered by higher raw material costs and rising logistics expenses. Developers will likely exercise caution throughout the ensuing quarters and increase supply to satisfy market demand, maintaining the market’s fundamentals.
Large acquisitions (100,000 square feet or more) accounted for about 80% of the demand in Q1 2023.
Demand in Pune has greatly exceeded supply over the past 7-8 quarters, with vacancy falling to 6.3% in Q1 2023. The demand from the automotive and engineering industries is still strong and consistently makes up at least 50% of total demand. The Chakan-Talegaon region has several massive warehouse parks planned as a result of this tremendous demand. In the next two to three years, this is anticipated to offer occupiers a variety of high-quality storage space options, promoting expansion. Rents will rise as a result of the flood of high-quality storage spaces and strong occupant demand, which will also maintain market activity. Managing Director of Colliers’ Pune and Mid-India Industrial and Logistics Services, Animesh Tripathi.
Vacancy levels in the top 5 cities decreased by 170 basis points YoY during Q1 2023 to 8.1% because to a limited supply and strong demand. With the exception of Delhi-NCR, most markets experienced single-digit vacancy levels because to consistent demand from 3PL, FMCG, and engineering industries. Rental rates increased annually in the top micromarkets as a result of an upbeat demand and a constrained supply. A few of the significant micro markets that had an increase in rentals by 14% and 6%, respectively, were Chakan in Pune and Bhiwandi in Mumbai.
Vacancy levels in the top 5 cities decreased by 170 basis points YoY during Q1 2023 to 8.1% because to a limited supply and strong demand.
Conclusion:- The top 5 cities in India experienced an 11% YoY increase in demand for industrial and warehousing space, with 3PL operators driving this growth by accounting for 41% of all leasing in Q1 2023. The retail and FMCG industries also experienced a three-fold increase year over year as they expanded into bigger markets like Delhi-NCR and Mumbai. Mumbai accounted for the biggest percentage of big deals, followed by Pune, while Delhi-NCR topped the demand with a 29% share of all leases.